- Report Published -
|Review of State Spending: December 2003 Update|
|Joint Legislative Audit and Review Commission|
|Section 30-58.3 of the "Code of Virginia", adopted by the 2001 General Assembly, directs JLARC to develop an annual report on State spending growth. Part of the initial concern was that spending growth may have been excessive, since it exceeded the growth in both population and the rate of inflation.|
This report is the third in JLARC’s series on State spending. The first report reviewed spending from FY 1981 through FY 2000, as well as the general fund revenue forecasting process and the use of performance measures in Virginia. The second report, Review of State Spending: June 2002 Update (House Document 3 of the 2003 Session), updated the analysis of budget and expenditure growth through FY 2001. This report focuses on long-term expenditure and appropriation growth from FY 1981 through FY 2002.
Over this period, the population of Virginia increased 34 percent, growing from 5.4 million to 7.3 million persons. Inflation went up 98 percent. State spending increased 350 percent, at an average annual rate of 7.5 percent. Adjusting for inflation and population growth, Virginia spending grew 70 percent, an average annual rate of 2.6 percent. This long-term growth rate drops to 2.4 percent by further adjusting long-term spending by removing deposits to the revenue stabilization fund and financial assistance for personal property tax relief, neither of which are “spending” in the conventional sense.
Three broad functional areas of government – education (elementary, secondary, and higher education), individual and family services (Medicaid, child support enforcement, health services, and related programs), and transportation (principally highway construction and maintenance) – accounted for 71 percent of the total spending growth. State spending has been dominated by these core governmental activities throughout the period of this review.
A variety of factors drove State spending growth. Medical inflation, a key factor in the Medicaid and other health-related budgets, increased 245 percent over the period, compared to the 98 percent increase in the consumer price index. Workload and service population increases were also important: the number of State prisoners increased 310 percent, the number of Medicaid-eligible recipients went up 136 percent, while the ADC/TANF caseload decreased 57 percent. Virginia initiatives in a variety of areas such as standards of learning (SOLs), economic development, and others over the period were factors in spending growth.